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Promulgating the Regulation on issuance of credit institutions' valuable

papers for mobilization of domestic capital

THE STATE BANK GOVERNOR

Pursuant to the December 12, 1997 Vietnam State Bank Law and the June 17, 2003 Law Amending and Supplementing a Number of Articles of Vietnam State Bank Law;

Pursuant to the December 12, 1997 Law on Credit Institutions and the June 15, 2004 Law Amending and Supplementing a Number of Articles of the Law on Credit Institutions;

Pursuant to the Government's Decree No. 86/2002/ND-CP of November 5, 2002 defining the functions, tasks, powers and organizational structures of the ministries and ministerial-level agencies;

At the proposal of the director of the Monetary Policy Department,

DECIDES:

Article 1.- To promulgate together with this Decision the Regulation on issuance of credit institutions' valuable papers for mobilization of domestic capital.

Article 2.- This Decision takes effect 15 days after its publication in the Official Gazette and replaces the State Bank Governor's Decision No. 1287/2002/QD-NHNN of November 22, 2002 promulgating the Regulation on issuance of credit institutions' valuable papers for mobilization of domestic capital.

Article 3.- The heads of the units under the State Bank; the directors of the State Bank's branches in provinces or centrally-run cities; the chairmen of the managing boards and general directors (directors) of credit institutions shall have to implement this Decision.

REGULATION ON ISSUANCE OF CREDIT INSTITUTIONS' VALUABLE PAPERS FOR MOBILIZATION OF DOMESTIC CAPITAL

(Promulgated together with the State Bank Governor's Decision No. 02/2005/QD-NHNN of January 4, 2005)

Chapter I

GENERAL PROVISIONS

Article 1.- Scope of regulation and objects of application

This Regulation prescribes the issuance of credit institutions' valuable papers for mobilization of capital from organizations and individuals in the Vietnamese territory.

Article 2.- Credit institutions issuing valuable papers

1. Credit institutions issuing valuable papers are those established and operating under the Law on Credit Institutions and the Law Amending and Supplementing a Number of Articles of the Law on Credit Institutions, and meeting the conditions prescribed in this Regulation, including:

- State-owned credit institutions.

- Joint-stock credit institutions.

- The Central People's Credit Fund.

- Joint-venture credit institutions.

- Credit institutions with 100% foreign capital and branches of foreign banks licensed to operate in Vietnam.

2. Particularly, financial leasing companies shall be allowed to issue only valuable papers with a term of over one year.

Article 3.- Purchasers of valuable papers

Purchasers of valuable papers include:

- Vietnamese organizations and individuals

- Foreign organizations and individuals that are lawfully operating or residing in Vietnam.

Article 4.- Interpretation of terms

In this Regulation, the following terms are construed as follows:

1. Valuable papers mean certificates issued by credit institutions to mobilize capital, acknowledging the obligation to repay a sum of money within a certain time limit, the interest payment conditions and other commitments between credit institutions and purchasers.

2. Short-term valuable papers mean valuable papers with a term of under one year, including promissory notes, short-term deposit certificates, bills and other short-term valuable papers.

3. Long-term valuable papers mean valuable papers with a term of one year or more counting from the date of issuance till the date of expiry, including bonds, long-term deposit certificates and other long-term valuable papers.

4. Registered valuable papers mean valuable papers issued in form of certificate or book-entry inscribed with their owners' names.

5. Bearer valuable papers mean valuable papers issued in form of certificate not inscribed with their owners' names. Bearer valuable papers are under the ownership of their holders.

6. Par value means the principal amount pre-printed or inscribed in a valuable paper issued in form of certificate or inscribed in a certificate of ownership over the valuable paper issued in form of book entry.

7. Total par value means total of par values of valuable papers issued by credit institutions in a year or in an issuance drive.

8. Term of valuable papers means the period of time from the date the credit institutions acknowledge debts to the end of the date they commit to fully repay such debts.

9. Issuance duration means the period of time from the date the credit institutions start the issuance to the end of the last day of an issuance drive.

10. Fixed interest rate means unchangeable interest rate which is applicable throughout the term of valuable papers.

11. Periodically adjusted interest rate means interest rate periodically changing according to the market and agreed upon between credit institutions and purchasers at the time of issuance.

12. Premature interest payment means the sale of valuable papers at prices lower than their par values and purchasers shall be paid amounts equal to their par values when they become mature.

13. Lump-sum interest payment upon maturity means the lump-sum payment of interests upon maturity of valuable papers together with their principals (par values).

14. Periodical interest payment means the payment of interests based on interest payment coupons for periods of 6 months or one year for long-term valuable papers.

Article 5.- Forms of issuance

1. Credit institutions shall issue valuable papers in forms of registered certificate, bearer certificate and book-entry.

2. In cases where they issue valuable papers in form of book-entry, issuing credit institutions shall grant purchasers certificates of ownership over valuable papers.

Article 6.- Forms and elements of valuable papers

1. A valuable paper issued in form of certificate must have the following elements

- Name of the issuing credit institution.

- Name of the valuable paper (promissory note, bill, short-term deposit certificate, long-term deposit certificate, bond, etc.).

- Par value.

- Term.

- Date of issuance.

- Date of maturity.

- Interest rate; mode of interest payment; time and place for interest payment.

- Mode of return.

- Place for payment of principal.

- Clearly inscribed registered or bearer.

For registered valuable papers, the name, the serial number of establishment license or business registration license and the address of valuable paper-purchasing organization (if purchaser is an organization); the name, serial number of identity card and address of valuable paper purchaser (if purchaser is an individual) must be clearly inscribed.

- Signature of general director or his/her authorized person and other signatures prescribed by the concerned credit institution.

- Signs and issuance serial number.

- Conditions and terms for transfer, discount or pledge of valuable papers at the very issuing credit institutions; handling of cases of risk and non-payment cases.

2. Apart from the elements prescribed in Clause 1 of this Article, issuing credit institutions may prescribe contents of note, and provide other instructions related to valuable papers.

3. For valuable papers issued in form of book-entry, the elements prescribed in Clause 1 of this Article must be inscribed in certificates of ownership over valuable papers.

4. For valuable papers with periodically paid interests, interest payment coupons enclosed with valuable papers must contain details related to valuable papers (serial number and par value), interest rate, interest amount and interest payment periods.

5. Valuable papers issued in form of certificate must be designed and printed with a high anti-counterfeiting capability.

Article 7.- Currencies used in issuance and payment

1. Valuable papers are issued in Vietnam dong or foreign currencies.

2. The issuance, payment and transfer of foreign-currency valuable papers must comply with the foreign exchange management regulations of the Socialist Republic of Vietnam.

Article 8.- Issuance modes

Credit institutions shall issue valuable papers by the following modes:

1. They directly issue valuable papers.

2. They issue valuable papers through other credit institutions acting as their agents or entrust the issuance of valuable papers.

Article 9.- Issuance duration

Duration of an issuance drive shall not exceed 60 days, including weekends and public holidays prescribed by law. Credit institutions shall only be allowed to issue valuable papers beyond such time limit when they obtain approval of the State Bank Governor.

Article 10.- Interest rates

Interest rates of valuable papers shall be set by issuing credit institutions in conformity with market interest rates, ensuring their business efficiency and operation safety.

Article 11.- Procedures for issuance and payment of valuable papers

Procedures for issuance and payment of valuable papers shall be prescribed by credit institutions in compatibility with their characteristics and management models, thus ensuring that the issuance and payment of valuable papers are accurate and safe.

Article 12.- Payment of principals and interests

1. Credit institutions shall pay principals to purchasers of valuable papers when such valuable papers become mature.

2. Credit institutions shall reach agreement on payment of interests at fixed interest rates or periodically adjusted interest rates.

3. Credit institutions shall pay interests by mode of premature interest payment, or lump-sum interest payment upon maturity, or periodical interest payment.

Article 13.- Transfer of valuable papers, settlement of disputes and handling of other risks

1. Ownership over valuable papers shall be transferred by modes of sale, purchase, presentation, donation, exchange and inheritance according to law provisions.

2. Procedures for transferring ownership over valuable papers or handling risks (crease, tear or loss of valuable papers and other risks) shall be prescribed by credit institutions in compliance with law provisions and in compatibility with their business characteristics and conditions, and ensuring legitimate interests of purchasers.

3. The settlement of disputes related to valuable papers shall be conducted according to current law provisions of the Socialist Republic of Vietnam.

Article 14.- Pledge, discount and rediscount of valuable papers

1. Valuable papers may be used as pledged assets at credit institutions according to law provisions on loan security if such credit institutions so agree.

2. Valuable papers shall be discounted or rediscounted according to current law provisions on discount and rediscount of valuable papers.

Article 15.- Preservation, delivery, reception and transportation of valuable papers

The preservation, delivery, reception and transportation of valuable papers of credit institutions shall comply with current regulations of the Government and the State Bank.

Chapter II

ISSUANCE OF SHORT-TERM VALUABLE PAPERS

Article 16.- Par values of short-term valuable papers

Par values of short-term valuable papers shall be pre-printed or printed under agreements between issuing credit institutions and purchasers.

Article 17.- Conditions for issuing short-term valuable papers

Credit institutions may issue short-term valuable papers when fully observing the limitations for ensuring operation safety according to the provisions of the Law on Credit Institutions, the Law Amending and Supplementing a Number of Articles of the Law on Credit Institutions and the State Bank's guidance.

Article 18.- Organization of issuance of short-term valuable papers

1. Credit institutions shall take initiative in organizing drives of issuance of short-term valuable papers in a year.

2. At least 20 working days before the starting time of each issuance drive, credit institutions shall have to send issuance notices for the expected issuance drive to the State Bank.

An issuance notice has the following contents:

- Name of the issuing credit institution.

- Name of the valuable paper (promissory note, bill, short-term deposit certificate, etc.).

- Total par value of the issuance drive.

- Term of valuable paper; mode of issuance.

- Date of issuance.

- Date of maturity.

- Interest rate; interest payment mode; time and place for interest payment.

- Mode of returning.

- Place for payment of principal of valuable paper.

- Results of previous short-term valuable paper issuance drives in the fiscal year (if any).

- Other contents notified by issuing credit institutions.

Chapter III

ISSUANCE OF LONG-TERM VALUABLE PAPERS

Article 19.- Par values of long-term valuable papers

1. Par values of long-term valuable papers in Vietnam dong, issued in form of certificate, shall be at least one million dong and at most one billion dong. Par values larger than the minimum par value must be multiples of the minimum par value.

2. Par values of long-term valuable papers in foreign currencies, issued in form of certificate, shall be at least one hundred US dollars or equivalent amounts in other foreign currencies, and at most one hundred thousand US dollars or equivalent amounts in other foreign currencies. Par values larger than the minimum par value must be multiples of the minimum par value.

3. Par values of long-term valuable papers being bonds issued in form of certificate shall be pre-printed on such valuable papers.

4. Par values of long-term valuable papers being long-term deposit certificates issued in form of certificate shall be pre-printed or printed according to agreements between issuing credit institutions and purchasers.

5. Par values of long-term valuable papers issued in form of book-entry shall be agreed upon by issuing credit institutions and purchasers.

Article 20.- Date of issuance and date of maturity for payment of long-term valuable papers being bonds

Long-term valuable papers being bonds issued in the same drive shall be inscribed with the same date of issuance and the same date of maturity for payment.

Article 21.- Conditions for issuing long-term valuable papers

Credit institutions are allowed to issue long-term valuable papers when fully meeting the following conditions:

1. Observing the limitations for ensuring operation safety according to the provisions of the Law on Credit Institutions, the Law Amending and Supplementing a Number of Articles of the Law on Credit Institutions and the State Bank's regulations.

2. Having a healthy financial status as assessed by the Banking Inspectorate.

Article 22.- Dossiers of application for issuance of long-term valuable papers

A dossier of application for issuance of long-term valuable papers of a fiscal year comprises:

1. An application for issuance of long-term valuable papers of the fiscal year.

2. A plan on issuance of long-term valuable papers of the fiscal year, clearly stating the issuance purpose, use plan, planned issuance times, total par value of issued papers, par value and name of valuable papers, issuance duration, interest rate and scope, mode and place for principal and interest payment; conditions and clauses on rights and obligations of credit institutions and purchasers. Such plan on issuance of long-term valuable papers must be approved by the managing board.

3. Financial statements of the latest two years up to the date the issuance application is filed. Credit institutions which have operated for less than two years shall send their financial statements for the period from the date of operation commencement to the date the issuance application is filed. Financial statements must be audited by an independent auditing organization fully meeting the conditions prescribed by the State Bank. Contents of financial statements must comply with the State Bank Governor's regulations on reporting regime applicable to credit institutions.

4. The business plan, the plan on capital sources and capital use of the fiscal year.

5. The charter and operation license (for credit institutions issuing valuable papers for the first time).

6. Changes in organizational structure and other changes (if any).

Article 23.- Forms of, and time limit for, examination and decision

1. On the basis of examining dossiers of issuance application and issuance conditions, the State Bank Governor shall issue decisions on the issuance of credit institutions' long-term valuable papers of the fiscal year.

2. The time limit for examination and decision on issuance of credit institutions' long-term valuable papers of the fiscal year shall not exceed 15 working days after the receipt of the complete issuance application dossiers of the credit institutions.

Article 24.- Organization of issuance

1. Credit institutions shall take initiative in organizing drives of issuance of long-term valuable papers within the already approved issuance plans of the fiscal year. Credit institutions shall be allowed to issue valuable papers beyond the approved plans only when the State Bank Governor issues written decisions on addition to the plans.

A dossier of application for consideration of addition to the plan on issuance of long-term valuable papers of the fiscal year comprises: An application for additional issuance of long-term valuable papers, the adjusted plan on issuance of long-term valuable papers and the adjusted business plan of the fiscal year.

2. At least 20 working days before the issuance time, credit institutions must send notices on plans on long-term valuable paper issuance drive to the State Bank (the Monetary Policy Department). If 10 working days before the planned date of issuance, the State Bank gives no written opinions, the credit institutions shall be allowed to organize the issuance of long-term valuable papers.

3. A notice on issuance of long-term valuable papers includes the following contents:

- Name of the issuing credit institution.

- Name of the valuable paper (bond, long-term deposit certificate, etc.).

- Total par value of the issuance drive.

- Term of the valuable paper; mode of issuance.

- Date of issuance.

- Date of maturity.

- Interest rate; interest payment mode; time and place for interest payment.

- Mode of returning.

- Place for payment of principal of valuable paper.

- Results of previous long-term valuable paper issuance drives in the fiscal year (if any).

- Other contents notified by the issuing credit institution.

Chapter IV

RESPONSIBILITIES OF CREDIT INSTITUTIONS, THE UNITS UNDER THE STATE BANK OF VIETNAM AND THE STATE BANK'S BRANCHES IN PROVINCES OR CENTRALLY-RUN CITIES

Article 25.- Responsibilities of credit institutions

1. To send dossiers of application for issuance of long-term valuable papers of the fiscal year to the State Bank (the Monetary Policy Department).

2. To send notices on issuance of short-term and long-term valuable papers in each drive to the State Bank (the Monetary Policy Department).

3. To publicize the issuance of valuable papers and organize the issuance of valuable papers according to the provisions of Article 18 and Article 24 of this Regulation.

4. To pay principals and interests on time and in full to valuable paper purchasers.

5. Within 10 working days after the end of an issuance drive, credit institutions shall report in writing on results of issuance of valuable papers to the State Bank (the Monetary Policy Department) and the State Bank's branches in the provinces or centrally-run cities where credit institutions are headquartered.

Article 26.- Responsibilities of the State Bank's branches in provinces or centrally-run cities

To coordinate with the Monetary Policy Department (when necessary) in submitting to the State Bank Governor for consideration and decision the annual issuance of long-term valuable papers of credit institutions in their respective localities.

Article 27.- Responsibilities of the units under the State Bank of Vietnam

1. The Monetary Policy Department

a/ To receive dossiers of application for annual issuance of long-term valuable papers, notices on issuance of short-term and long-term valuable papers, reports on results of issuance of valuable papers of credit institutions.

b/ To assume the prime responsibility for, and coordinate with the concerned units in, considering credit institutions' applications for annual issuance of long-term valuable papers for submission to the State Bank Governor for decision.

c/ To study the situation of issuance of valuable papers of credit institutions before proposing to the State Bank Governor amendments and/or supplements to the regulations on issuance of valuable papers of credit institutions.

2. The Department for Banks and Non-Bank Credit Institutions

a/ To supply to the Monetary Policy Department information on organization and operation of credit institutions and credit institutions' changes approved by the State Bank.

b/ To coordinate with the Monetary Policy Department in considering and giving opinions on the processing of applications for annual issuance of long-term valuable papers of credit institutions.

3. The Banking Inspectorate

a/ To supply to the Monetary Policy Department information on the observance of the limitations for ensuring safety in operation of credit institutions which apply for issuance of long-term valuable papers according to the provisions of the Law on Credit Institutions, the Law Amending and Supplementing a Number of Articles of the Law on Credit Institutions and the State Bank's guidance.

b/ To supply to the Monetary Policy Department assessments of the Banking Inspectorate on operation and financial status of credit institutions which apply for issuance of long-term valuable papers through the on-spot inspection or remote supervision.

c/ To coordinate with the Monetary Policy Department in considering and giving opinions on the processing of applications for annual issuance of long-term valuable papers of credit institutions.

d/ To inspect and supervise the issuance of valuable papers of credit institutions; to handle according to its competence and propose the State Bank Governor to handle cases of violating the provisions of this Decision.

4. The Foreign Exchange Management Department

To coordinate with the Monetary Policy Department in considering and giving its opinions on the processing of applications for annual issuance of foreign-currency long-term valuable papers of credit institutions.

5. The Accounting and Finance Department

To guide accounts for accounting credit institutions' operations of issuance of short-term and long-term valuable papers.

6. The Issuance and Treasury Department

To provide consultancy to credit institutions on designing and printing of valuable papers, thus ensuring their high anti-counterfeiting capacity, when so requested by credit institutions.

Article 28.- Handling of violations

Organizations and individuals that violate the provisions of this Regulation shall, depending on the nature and seriousness of their violations, be sanctioned for administrative violations in the monetary and banking domain or examined for penal liability.

Article 29.- Amendment and supplementation

The amendment and supplementation of this Regulation shall be decided by the State Bank Governor./.